flamorte

Performance for Harvard, Yale Endowments in 2008

I am a Yale SOM grad, and was fortunate enough to speak to David Swensen at length about the endowment fund and its strategy. He may not always be right, butr he is not mendacious in his representation of his fund's methodology.

First, remember that he is not promoting himself - others are. He is accountable to the board of the fund, and has no interest in publc opinion. True, he has written two books, but in the end, he has foregone compensation from the private sector that would be a double-digit multiple of what he is currently paid by Yale.

OMG

He makes no pretense about his asset allocation method - it may be that the people interpreting his method make their own assumptions. He is clear about the fact that his fund invests in illiquid assets that cannot be readily marked to marklet. He is clear that his method is not readily replciated by the means available to the "ordinary investor. However, he has deveoped some investment principles that have seem to have universal validity.

As for large cap U.S. stocks, well, it is public knowledge that the Yale endowment is invested in 10% U.S. equities, across the scale of market capitalization size.

No, the Yale endowment does not allow for short selling, and if you read Mr. Swensens book, you will find that, along with other famous invest managers, he would agree with the adage that "no one gets rich selling short". Whether it is market volatility, randomness or government intervention, in the long run, trying to time the market on short trades is a losing proposition for the small investor.

I wish it wasn't so (long/short trading is a lot of fun), but in the end, the fact that we are a nation in a growth stage (so far) make it so. I short successfully from time-to-time, but whatever Success I have had is ostly luckl. Maybe that will change as baby-boomers age and there is a generational net liquidation of the equity asset class, but that is speculation for now.

"Contrarian@coalmine", and others. read the man's own words before passing judgement. He is a better trader than you acknowledge.